What if I Change My Mind After Delaying Social Security Retirement Benefits?

Question:

What if I delay retirement but then become sick, making it unlikely I’ll live long enough to break even on my delayed Social Security benefits?

Answer: Fortunately, if you decide to delay collecting Social Security until sometime after your full retirement age, there’s a way to reverse this decision if you become ill and either need the money right away or expect to die sooner than you had hoped…but only if you plan ahead.

If you claim your retirement benefits at full retirement age, then immediately “suspend” collecting those benefits, you reserve the right to unsuspend the benefits at any time and start collecting them. The real bonus is that you can request that you receive all the benefit payments owed to you since your full retirement age. Social Security calls this “reinstatement” of your retirement benefits. You will receive a lump sum of the benefits you would have received if you hadn’t suspended your benefits. Of course, this lump sum won’t include the delayed retirement credits that you were hoping would increase your retirement benefits permanently by waiting until 68, 69, or 70 to retire.

This is a helpful option to have in case your finances suddenly change for the worse or you become seriously ill and your life expectancy is unexpectedly shortened. In this way, claiming and suspending your retirement benefits is kind of like having an insurance policy. You suspend the benefits in the hopes that you will live a long and healthy life and not need to access the funds until age 70 (or 68 or 69, as the case may be). But if you run into financial trouble and need money, or you find out you have a serious or terminal illness and aren’t likely to live long enough to recoup the Social Security benefits that you lost by delaying collecting them, you can access the money at any time, right away.

For more details on delaying retirement, suspending benefits, and reversing the decision, see Nolo’s  article on Changing Your Mind About Delaying Social Security Retirement.

Can I Get Interim Assistance (IA) while waiting for SSI?

Question: We were wondering if you could contact us to give us more information on (IA). My husband is waiting on his court date for SSI and we are in need of financial help. He has asked his lawyer and local Social Security office and they are clueless to (IA) information for some reason. We live in Indianapolis, Indiana and any insight you could provide would be greatly appreciated! Thank you so much.

“Interim assistance” (IA) is temporary benefit provided not provided by Social Security or the federal government, but by your state government. It’s usually administered by your state’s public assistance (welfare) agency or department of social services.

Interim assistance is really a type of loan rather than a cash benefit. When you apply for SSI disability benefits through the Social Security Administration, your state may front you some cash to pay for living expenses, and you promise to pay the state back when you are approved for disability benefits and you get your SSI backpay from the Social Security.

Not everyone gets approved for interim assistance – you must qualify financially for your state’s public assistance program and your state agency must find that there’s a strong chance you’ll be approved for SSI benefits. (Note that those who apply for only SSDI (Social Security Disability Insurance) are not eligible for IA.)

When you apply for interim assistance, you sign an “interim assistance agreement” or interim assistance reimbursement agreement.” That allows Social Security to take a portion of your SSI back pay to pay back your state for the interim assistance money.

Indiana does participate in the Interim Assistance Reimbursement (IAR) Program. Contact the Family and Social Services Administration, Division of Aging or Indiana’s Disability Determination Bureau to find out how to apply. The statue that governs IA in Indiana is IC 12-9-6-2. For more information, see our article on SSI’s interim assistance program.

Shoring Up Social Security to Save the Trust Fund

The McCrery-Pomeroy SSDI Solutions Initiative, a project chaired by former congressmen Jim McCrery (R-LA) and Earl Pomeroy (D-ND) and funded by the Committee for a Responsible Federal Budget, has put out a call for innovative proposals to improve the Social Security Disability insurance (SSDI) program to prevent insolvency and provide long-term financial stability. Topics the initiative is calling for paper proposals on include the following:

  • Improving the Disability Determination Process
  • Modernizing Determination Criteria and Program Eligibility
  • Strengthening Program Integrity and Management
  • Improving Incentives and Support for Beneficiaries to Return to Work
  • Encouraging Disabled Workers to Remain in the Workforce
  • Improving SSDI Program Interaction with Other Federal, State, Local, and/or Private Programs
  • Moving beyond the Current “All or Nothing” System of Awarding Benefits
  • Encouraging Employers to Support Disabled Workers

I was surprised not to see any fiscal solutions on the list, such as raising the cap on Social Security (FICA) taxes, which currently taxes only the first $117,000 of a taxpayer’s income, at 6.2%. Income above this cap is not taxed for Social Security purposes. But perhaps this idea, which has been around for a long time, is too simple for the purposes of this initiative and not considered innovative enough. More details on proposal topics can be found here: http://ssdisolutions.org/call-papers. Proposals are due by November 1.

For those who want to read an overview on the future of Social Security, including why things aren’t quite as dire as they sound, read Nolo’s article on whether Social Security benefits will be there when you retire.

Can I Get My Student Loans Canceled When I’m on Social Security Disability?

Question: I received a heart transplant three months ago and am unable to work. I was just approved for Social Security disability. Will my student loans be automatically forgiven?

Answer: Unfortunately, no, student loan cancellation won’t be automatic – but an award of Social Security disability insurance (SSDI) benefits can help.

The federal Department of Education (DOE) will cancel (“discharge”) federal student loans for anyone with a total and permanent disability (TPD). The DOE considers a TPD to be an impairment that prevents you from doing any significant amount of work for at least five years. As you can see, this is a tougher definition to meet than Social Security’s definition of disability, which only requires you to be unable to work for one year.

So how does the Department of Education use evidence of an award of SSDI (or SSI) to judge whether you should receive a discharge of your student loans? When the Social Security Administration (SSA) awards disability benefits, the agency puts you into one of three categories based on its expectation of whether your condition will improve. The category dictates when you will receive a “continuing disability review” to see if your disability is still present. Here are the categories:

  • Medical Improvement Expected (MIE). Your condition is expected to improve in the short term. Your case will be reviewed in six to twelve months.
  • Medical Improvement Possible (MIP). The SSA believes it’s possible your condition will improve, but it’s not sure when. Your case will be reviewed in about three years.
  • Medical Improvement Not Expected (MINE). The SSA expects that your condition will not improve and you will be permanently impaired. Your case will be reviewed in five to seven years.

Your review date will be included in your initial award letter (if it’s not, contact Social Security and request a Benefits Planning Query). Only those who are given a review date of five to seven years qualify for a total discharge of their federal student loans.

Social Security does not place heart transplant recipients into the Medical Improvement Not Expected (5-7 year review) category, so they are not automatically eligible for loan cancellation. Recipients of a heart transplant fall into the Medical Improvement Expected category, and in fact, the SSA’s disability listing for heart transplant recipients says that these individuals will be considered disabled only for one year following the surgery. After that, the SSA will reevaluate the individual’s condition to see whether they can meet the definition of disability another way. Our article on disability benefits for heart transplant recipients lays out the complications that a heart transplant might face and the ways they could get disability benefits after one year.

That said, heart transplant recipients may still be able to get their student loans cancelled. If your doctor submits documentation showing that you are unable to work and that your disability is expected to last for a continuous period of five years, the DOE may agree to cancel your loans. For more information on applying for a TPD discharge from the DOE, see our article on canceling student loans due to permanent disability.

If that doesn’t work, when it’s close five years since your heart surgery and you are still clearly disabled, you should qualify for a discharge of your loans. At that point, you can prove your continuing disability by having your doctor submit documentation that you are unable to work and that your disability has lasted for a continuous period of five years. In this case, any loan payments you made during the time you were receiving disability benefits (specifically, since you sent in your original SSA notice of award to the DOE) should be returned to you. However, there may be no need to make payments during this time if you get a temporary deferment or forbearance due to hardship and disability. See Nolo’s article on loan deferment and forbearance for more information.

What Can a Representative Payee Buy for Someone on SSDI?

Question: I have been searching the Social Security site and I can’t seem to find a list of what a Representative Payee can and cannot purchase for their friend with Social Security disability insurance (SSDI) benefits.  Is there a list available, especially of what cannot be purchased?  “Use common sense” does not appear to be a very helpful answer.

Answer: After paying for the disabled person’s food, shelter, clothing, medical and dental costs, and any rehab expenses, the representative payee can spend disability benefit money on personal comfort items and recreation costs (such as outings, movie tickets, or magazine subscriptions). The disabled person does have the right to spend some discretionary money himself or herself, once the payee has made sure the person’s needs are met. (However, if there are drug or alcohol abuse issues, spending money should be given in small amounts and monitored as much as possible.)

As far as discretionary spending goes, Social Security evaluates what’s reasonable spending on a case-by-case basis. The payee really needs to know how the individual is living and what his or her needs are. This is why Social Security doesn’t publish a list of personal comfort, recreation, or entertainment expenses that are and are not allowed. What’s reasonable spending for some would be unreasonable for others. For instance, because a payee for a person receiving $700 in SSI benefits per month will have trouble paying for the person’s food, shelter, and clothing costs as well as any medical and dental expenses, purchasing a flat-screen HDTV for $300 would probably not be seen as reasonable spending, but allowing an SSDI recipient who receives $2,000 per month to make the same purchase might be reasonable, especially if the person enjoys spending a lot of time watching television and isn’t able to get out much.

Here are a few more details for representative payees:

  • A representative payee can use benefit money to pay past-due bills for the beneficiary (the person who is eligible for Social Security benefits) — if the beneficiary’s current needs are paid for.
  • If there is money leftover after meeting the beneficiary’s current needs and some discretionary spending, it must be saved for the beneficiary in a separate bank account.
  • The payee is not allowed to take a fee for payee services from the monthly benefit (unless the payee is a nonprofit organizational payee with written approval from Social Security to charge a fee).
  • Each year, the payee will have to fill out a form accounting for how the benefits were spent. Social Security will send the form to the representative payee each year.

You can some more information in our article on what a representative payee can and cannot spend money on. The key to remember is that spending must always be in the best interests of the beneficiary.

Can I Work or Collect Unemployment While I Collect Long-Term Disability?

Question: I hurt my back after working as a furniture mover for 15 years, and I can’t go back to work. I have a herniated disc with nerve root compression along with arthritis in several other discs. I can’t lift anything over 10 pounds. I’ve been collecting short-term disability for the past few months, and my long-term disability benefits will kick in next month. But I know already it’s not going to be enough to live on. Can I get a new job while I’m collecting long-term disability benefits? If I can’t find a job, can I collect unemployment?

Answer: Whether you can work and collect long-term disability (LTD) benefits at the same time — or collect unemployment benefits while you’re collecting LTD benefits — depends on your LTD policy, and possibly how long you’ve been collecting LTD benefits. If your LTD insurance policy says that you can collect benefits when you are unable to perform “your regular occupation” or “your own occupation” due to your impairment, injury, or illness, you would be allowed to work at a different type of job while you collect LTD benefits. For instance, you could collect LTD benefits and starting working a desk job  – if your LTD policy pays out when you can’t work your own occupation. The same goes for unemployment benefits. If you are ready, willing, and able to work at least some types of jobs, you can apply for unemployment benefits even though you’re collecting LTD benefits under an “own occupation” policy due to being unable to perform the duties of your regular occupation.

If, however, your long-term disability insurance policy says that you are disabled only if you are unable to perform the duties of “any occupation,” then you cannot work at another type of job or collect unemployment benefits. Most policies that use this definition add that, for a line of work to be able to count as something you could do, it must be a job to which you are reasonably suited “based on your job training, education, or experience.” (For instance, if the only jobs you can now do require  a college education and you don’t have it, you would be considered to be unable to work in any occupation.)

Many employer-provided (ERISA) long-term disability policies start off with an “own occupation” definition of disability and then, after you have been collecting LTD benefits for two years, switch to “any occupation” definition of disability. After the two years, if someone is working or collecting unemployment benefits, your LTD benefits could be terminated because you’ll no longer be considered disabled.

To figure out whether you have an “own occupation” or “any occupation” policy, or whether your policy switches from “own occupation” to “any occupation” after two years, request a copy of your policy or its Summary Plan Description page.

Keep in mind that many insurance policies allow the insurance company to offset long-term disability payments with unemployment benefits. This means that if you’re collecting a certain amount in unemployment benefits, the insurance company can usually deduct that amount from the LTD benefits it pays you. For more information, see Nolo’s article on collecting LTD and unemployment at the same time.

Can a wife file a disability application for her husband?

Question: I have a close friend whose husband was convicted of a felony in Ohio. After his 3 and 1/2 year sentence was completed, he moved to South Carolina to live with his parents. A few months ago he was the victim of an assault, which left him unable to work. My friend and he are still legally married, and have a 12-year-old daughter together. She has never received child support or SSDI benefits. My question is, can my friend begin the application process for SSDI herself if he is not mentally capable?

Answer: Social Security does allow an individual who is primarily responsible for caring for a mentally disabled person to file for benefits in some circumstances. But it sounds like your friend, while still married, is not living with or taking care of her husband, so she will not be allowed to file for disability benefits on his behalf. However, your friend’s husband’s parents may be able to file for benefits, if your friend can convince them to.

Social Security policy does encourage disability applicants themselves to apply for benefits and sign the application in most cases. But if a person with a mental disability does not understand the meaning of filing for benefits, or has been adjudged mentally incompetent, the person’s primary caretaker may file an application on the person’s behalf.

In deciding whether the person can understand what it means to file for disability benefits, Social Security will consider whether the person is incapable of reasoning properly, has impaired judgment, or is unable to communicate with others. But if the person is able to agree to have someone else file for benefits, Social Security will find that the person is capable of understanding the meaning of filing for benefits and will require that person to sign the application. This is not to say that your friend’s husband’s parents could not assist him with the application, but your friend’s husband would have to sign the application himself in this situation.

If your friend’s husband’s parents agree to file a disability application on his behalf, they might have to submit a statement to Social Security saying that they are the parents of the disability applicant and they are currently caring for him in their home. Social Security would also send a form to your friend’s husband’s doctor to fill out, asking the doctor whether the disability applicant can understand the meaning of filing for benefits. If the doctor answers no, Social Security will notify the disability applicant that a claim has been filed and allow the applicant 10 days to protest the application.

Keep in mind that whoever files the application will have to have a good deal of knowledge about which doctors the applicant has seen and when, along with their contact information, so that Social Security can request the applicant’s medical records. The person filling out the application should also know the applicant’s diagnoses and prognoses, how the applicant’s diminished mental capacity affects his activities of daily living and makes it impossible for him to work, the mental treatments that have been attempted and the medications that have been prescribed, and whether the applicant is complying with the treatment and taking the medication as instructed.

Finally, know that while Social Security will allow a court-appointed guardian to file an application on someone else’s behalf, a person with a power of attorney cannot file an application on someone else’s behalf.

If I recover after surgery, can I still get disability benefits for the two+ years I couldn’t work?

Question: I first applied for Social Security disability in June of 2012. I had a hearing in January 2014. The judge ordered a second hearing scheduled in July 2014. It was cancelled because the judge was unavailable. It is now scheduled for October 2014. I am scheduled for surgery in September 2014. If the surgery is successful obviously I won’t be eligible for disability. Is there any way to petition for the backpay only?

Answer: Yes, you can receive Social Security disability benefits for what’s called a “closed period.” If, at your October 2014 hearing, the administrative law judge (ALJ) finds that you are able to return to work, but that you were disabled before your surgery, you can still get backpay from the beginning of your disability entitlement date (I’ll clarify this below) until the day you are physically able to return to work.

You do not need to file a separate petition for a closed period. While some applicants apply for a closed period of benefits, most of the time, applicants apply for ongoing disability benefits. If a judge finds an applicant was disabled but is no longer, Social Security will simply award the applicant with a closed period of benefits.

Some experts say that’s it’s easier to qualify for a closed period of benefits, since Social Security isn’t committing to pay you benefits for an open-ended period of time. If your surgery is successful, you may want to talk to a disability lawyer about whether it makes sense to inform the judge that you are seeking benefits for a closed period only.

Your disability entitlement date depends on whether you qualify for SSI or SSDI (Social Security disability insurance). If your application was for SSI, you would be entitled to be paid for your entire period of disability – from the month following your application date to the date you are able to return to work. If you applied for SSDI, you would be paid only for five months following the onset of your disability until you’re able to return to work (due to SSDI’s five-month waiting period). Note your entitlement date can be no earlier than one year before your application date.

To learn more about closed periods, see my article on closed periods of disability.

How will getting married affect my SSI payments?

Question: I’m getting married and am over 60 years old. How will this affect my SSI payments? My husband-to-be is 66 years old and is on Social Security disability and has retirement benefits of less than $500 a month.

Answer: If you get married while receiving SSI, your payment is likely to be reduced because of your husband’s income. Why? Because most of your husband’s Social Security income will be “deemed” to belong to you. Social Security uses a complex formula to come up with what your new SSI payment would be – I’ll show you how it works.

First, know that anytime a spouse’s income is more than $361 per month, that income is subject to deeming. ($361 is the amount that Social Security presumes is necessary for your spouse’s own food and shelter needs, believe it or not.) If you have a minor or disabled child, another $361 will be “saved” for that child, meaning your spouse’s income could be as much as $721  per month without any income being deemed to you. But you didn’t mentioned having an adult disabled child at home, so I assume it would just be you and your husband living together after you’re married, making your husband-to-be’s income subject to deeming.

To figure out what your new SSI payment would be, you would take your husband-to-be’s income and add it to any income you get each month (you didn’t mention whether you have any income beyond SSI, so I’ll assume not). Let’s say your joint income is $500, since you mentioned your husband-to-be’s Social Security check is around $500 (I assume your husband’s disability payments have recently converted to retirement payments, since you can’t receive Social Security disability payments after full retirement age). You then subtract $20 from that amount, and what’s left is the spousal income that is deemed to you ($480).

You then subtract $480 from the SSI income limit for a couple (not for an individual) to come up with your monthly benefit. The SSI income limit (and monthly benefit rate) for a couple is $1,082 in 2014. So after subtracting $480, the $602 remainder is what your new monthly benefit would be. This is less than the $721 SSI benefit that you may have been receiving ($721 is the standard federal benefit amount). Note that these calculations would change if you were receiving more money because your state adds a state supplement to the SSI payment.

Or, in case your husband-to-be has income besides Social Security (you didn’t say), your SSI payment would be reduced even more. For instance, if your husband-to-be also was receiving $300 from another source (not counting any money from an IRA or company pension), you would have to subtract that from the couple’s income limit as well, leaving you with an SSI payment of only $302. If your husband-to-be has other unearned income of more than about $600, your SSI payment would probably be eliminated altogether.

Why can’t I get emergency disability payments from Social Security?

Question: Why would Social Security Administration put information on their site about emergency payments if they’re not actually available? My lawyer says I can’t get them and I shouldn’t read this stuff. I suffer from major depression, carpel tunnel, and polyarthritis among other health issues. I’ve been waiting eight months waiting for a disability hearing date.

I am being foreclosed on and I don’t even have a hearing date yet, to negotiate me being allowed to make modified payments to the mortgage company. I was also not approved for a dire need situation even though SSA was sent a foreclosure proceedings letter from the mortgage company. All this just makes the major depression worse, now dealing with homelessness with 3 children.

Answer: I’m so sorry to hear of your struggles. Unfortunately Social Security makes emergency payments to disability applicants only under some very specific circumstances. First, only SSI applicants who are experiencing extreme hardship qualify for emergency payments. If you qualify only for Social Security disability insurance (SSDI) benefits, you can’t receive emergency payments. But it sounds like your income is low and you’ve exhausted your assets, so you will like qualify for SSI.

Second, only those who qualify for presumptive disability benefits are eligible for emergency payments. Presumptive disability benefits are available only for a few specific disabilities that are so severe that Social Security can almost assume you’ll qualify for disability benefits, based on your initial Social Security interview or application alone.

Some illnesses or conditions that often qualify for presumptive disability payments are AIDs, ALS, Down syndrome, amputation of the leg at the hip, total blindness, total deafness, stroke, and severe intellectual disability. Depression, arthritis, and carpel tunnel syndrome, even in combination, will not qualify for presumptive disability payments or emergency payments, though it never hurts to ask when you first apply. Likewise with a dire need letter, which can be helpful in moving up a hearing date, though dire need letters seldom work, as you saw yourself.

Most states do offer interim assistance for disability applicants for those who meet public assistance criteria and are severely disabled. Read more about this in Nolo’s article on state interim assistance and other government assistance.

It sounds like your lawyer didn’t want to explain why you wouldn’t qualify for emergency payments and isn’t interested in helping you learn about disability benefits on your own – or at the least, doesn’t want you to misunderstand information put out by Social Security. If you want an easy-to-understand guide to disability benefits, see if your library has Nolo’s Guide to Social Security Disability, which explains the ins and outs of the process.